Dischargeable Debt

When people talk about "wiping out debt" in bankruptcy, they're talking about dischargeable debt. These are the debts that federal bankruptcy law allows to be erased — meaning once the court issues your discharge order, you legally owe nothing more, and creditors cannot try to collect.

The most common types of dischargeable debt include credit card balances, medical bills, personal loans, utility arrears, most older income tax debt (taxes more than 3 years old that meet certain filing requirements), payday loans, gym memberships, and lease obligations on property you're surrendering. If a creditor violated the automatic stay or engaged in fraud, even secured debts may sometimes become dischargeable.

Whether a specific debt is dischargeable depends on its type, timing, and whether any exceptions apply. Some debts that might seem dischargeable have specific rules — for example, taxes from recent years may not qualify, and debts incurred through fraud are typically excluded. When in doubt, review your specific debts against the list of non-dischargeable exceptions.

Identifying your dischargeable debt is essential to understanding the value of filing bankruptcy. If most of your debt is dischargeable — credit cards, medical bills, personal loans — then bankruptcy can provide significant relief. If most of your debt is non-dischargeable — student loans, recent taxes, domestic support — bankruptcy's benefit may be more limited.

After your discharge is issued, dischargeable debts are gone forever. Creditors who try to collect after receiving notice of your discharge are violating a federal court order and can be sanctioned. This permanent protection is one of the most powerful features of the U.S. bankruptcy system.